NGX volume plunges 60 percent as selective buying lifts index

ASI gains 0.81 percent on FTSE Russell reclassification catalyst

TRADING activity on the Nigerian Exchange Limited (NGX) contracted sharply, last week, with equity volume falling by 3.74 billion shares, or 59.8 percent week-on-week, even as the benchmark index recovered on renewed buying interest in selected large-cap stocks.

Investors traded 2.507 billion shares worth N123.223 billion in 173,561 deals during the four trading days to August 28, compared with 6.242 billion shares valued at N157.764 billion in 186,496 deals in the preceding week. This means the market lost nearly 60 percent of its weekly volume, while transaction value declined by a more moderate 21.9 percent and the number of deals fell 6.9 percent.

The sharp differential between volume and value suggests that although the number of transactions declined only modestly, the market witnessed significantly fewer shares changing hands. This points to reduced breadth of participation and increasingly selective positioning by investors, rather than a broad return of risk appetite.

This was reflected in the market’s performance. The NGX All-Share Index (ASI) rose 0.81 percent week-on-week to 241,298.47 points, while market capitalisation increased by N1.29 trillion to N155.83 trillion. The gain pushed the market’s year-to-date return to 55.06 percent, although the month-to-date performance remained negative at -1.6 percent.

The positive index performance was largely driven by selected heavyweight counters, particularly in the banking and oil & gas sectors. First Holdco Plc gained 11.58 percent, Seplat Energy Plc rose 10 percent and Access Holdings Plc advanced 9.3 percent, providing significant support to the benchmark.

However, the broader market painted a weaker picture. Fifty-five stocks closed lower against only 24 gainers, producing a breadth ratio of just 0.44x. Analysts said the divergence between the rising ASI and negative breadth showed that the gains were concentrated in a handful of heavyweight counters rather than broadly distributed across the market.

Market performance

Sectoral performance was mixed but generally supportive of the benchmark. The oil & gas sector led with a 4.54 percent gain, driven particularly by Seplat Energy’s 10 percent appreciation. The banking sector followed with a 2.85 percent rise, supported by gains in First Holdco Plc, Access Holdings Plc, and other selected tier-one banks.

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The positive performance in these sectors was partly offset by weakness elsewhere. The insurance sector declined 1.27 percent, dragged by International Energy Insurance Plc, Veritas Kapital Assurance Plc and Sunu Assurances Nigeria Plc, while the Industrial Goods sector slipped 0.15 percent.

At the individual stock level, UPL was the best-performing stock, gaining 18.8 percent, followed by First Holdco (+11.6 percent), Seplat Energy (+10 percent), Red Star Express (+9.9 percent) and Transcorp Hotels (+9.8 percent).

On the losing side, International Energy Insurance Plc plunged 26.6 percent, while Fidson Healthcare Plc, Caverton Offshore Support Group Plc, Zichis Industries Limited and Austin Laz & Company Plc declined 17.7 percent, 15.2 percent, 14.7 percent and 12 percent, respectively.

Financial Services remained the dominant trading segment, accounting for 1.977 billion shares, or 78.87 percent of total equity volume, valued at N71.563 billion. Services and ICT followed with 148.226 million and 117.982 million shares, respectively.

Market analysts expect the NGX to maintain a cautiously positive bias in the coming week, supported by continued positioning in Banking, Oil & Gas and Commodity stocks.

A major catalyst is the confirmation by FTSE Russell that Nigeria will be reclassified to Frontier Market status effective September 21, 2026. Analysts believe the development could strengthen investor confidence and support further positioning ahead of Nigeria’s formal return to the Frontier Market universe.

Nevertheless, the outlook remains tempered by the market’s high year-to-date return, weak breadth and declining trading activity. Analysts expect investors to remain increasingly sensitive to valuations, with further gains likely to be concentrated in fundamentally stronger and relatively undervalued counters.

Elevated fixed-income yields are another competing factor. The average Treasury-bill secondary-market yield rose 10 basis points week-on-week to 19.3 percent, while strong demand at recent government securities auctions underscores the attractiveness of fixed-income assets.

Consequently, the immediate test for the equities market is whether the FTSE Russell catalyst can translate into broader participation and a recovery in trading volume, rather than simply extending gains in a narrow group of heavyweight stocks.

Overall, analysts expect the NGX to remain positive but uneven, with investors likely to favour liquid, fundamentally stronger stocks and counters offering attractive valuations. The combination of the Frontier Market reclassification, sector-specific buying and valuation considerations is expected to keep the market active, but selective rather than broad-based, in the near term.